Budget 2024: From adoption of EVs to FAME subsidies, here’s what Auto sector is looking for
As the Union Budget 2024 approaches, the automotive sector in India is abuzz with anticipation. The industry, particularly the Electric Vehicle (EV) segment, is looking forward to significant policy changes that could drive growth and innovation
- Jan 30, 2024,
- Updated Jan 30, 2024 9:22 PM IST
The automotive sector is eagerly awaiting Budget 2024 with high expectations for the Electric Vehicle (EV) industry. The sector is currently grappling with a complex tax structure, and industry leaders are hoping for some level of rate rationalisation to reduce interpretative issues and litigations.
Gyanendra Tripathi, Partner & Leader, Western Region, Indirect Tax, BDO India, highlighted the need for a reduction in the GST rate on parts/components used in the manufacture of EVs, as well as on batteries. “This would address the current issue of accumulation of input tax credit (ITC) by the EV manufacturers,” he said. He also emphasized the need for an extension of FAME subsidies, clarity of tax treatment on EV charging, eligibility of ITC on setting up of the charging stations, and a GST rate reduction on entry-level two-wheelers.
Echoing these sentiments, Himanshu Arora, CEO and Co-founder of GoMechanic, expressed optimism about Budget 2024’s focus on enhancing infrastructure. “Our team has been steadily preparing for the rise of EVs, equipping our mechanics with the necessary skills in a measured and thoughtful manner,” he said. He also stressed the importance of improved EV charging networks and maintenance facilities.
Muskan Kakkar, COO and Co-founder of GoMechanic, also expressed excitement about the anticipated emphasis on infrastructure and skilling initiatives in the budget. “Our recent venture into the EV market is timely, as these initiatives promise to bolster the ecosystem around electric vehicles,” she said.
Meanwhile, Varun Goenka, Co-Founder and CEO of Chargeup, pointed out the need to look beyond subsidies for the purchase of electric 2 and 3-wheelers and address other financial concerns that could make a bigger and more positive impact on the market compared to the subsidies. “FAME-I and FAME-II did a lot of good to these segments, as the demand was catalyzed and several new EV OEMs came into the market. However, today, there is not much of a difference between the cost of electric and conventional 2 and 3-wheelers. With greater demand, the gap will further close in 2024 and beyond,” he said.
Adding to the previous insights, Rajat Jaiswal, Co-founder & CEO of KeyDroid, expressed his anticipation for the Union Budget 2024. He emphasized the need for comprehensive support across the automotive ecosystem, benefitting consumers, OEMs, and suppliers alike. He also advocated for budgetary measures that include skilling programs and prolonged clean mobility initiatives and schemes.
Rohan Shravan, Founder and CEO of Tresa Motors, commended the government’s commitment to sustainable mobility and emission reduction. He highlighted the importance of the FAME scheme, which provides crucial subsidies for electric vehicles. With FAME II subsidies likely to be exhausted this year, he sees the proposed INR 40,000 - 50,000 crore for FAME III to cover more EVs as a positive step. He also requested the incorporation of incentives for the EV Heavy Commercial Vehicle and EV component manufacturers.
Greg Moran, CEO and Co-Founder of Zoomcar, reflected on how last year’s budget paved a path to higher adoption of EVs in India. He anticipates the Union Budget 2024 to pave the way for innovative policies that accelerate sustainable mobility solutions and drive economic resilience.
Devndra Chawla, CEO & MD, GreenCell Mobility said, "One significant recommendation is to secure permanent viability gap funding for financially pressured State Transport Units (STUs) and to develop credit guarantee systems to reduce lending risks. We emphasise the importance of an infrastructure sector tag for financing to electric mobility projects and propose a capital expenditure subsidy for private bus operators that deploy e-buses on intercity routes. Categorising e-mobility loans as Priority Sector Lending and introducing incentives for battery recycling are critical steps toward lowering interest rates and promoting sustainability."
Also read: Budget 2024: From AI to semiconductors, here's what tech sector expects from the govt
Also read: Budget 2024: What retail, FMCG sectors expect from the Interim Budget
The automotive sector is eagerly awaiting Budget 2024 with high expectations for the Electric Vehicle (EV) industry. The sector is currently grappling with a complex tax structure, and industry leaders are hoping for some level of rate rationalisation to reduce interpretative issues and litigations.
Gyanendra Tripathi, Partner & Leader, Western Region, Indirect Tax, BDO India, highlighted the need for a reduction in the GST rate on parts/components used in the manufacture of EVs, as well as on batteries. “This would address the current issue of accumulation of input tax credit (ITC) by the EV manufacturers,” he said. He also emphasized the need for an extension of FAME subsidies, clarity of tax treatment on EV charging, eligibility of ITC on setting up of the charging stations, and a GST rate reduction on entry-level two-wheelers.
Echoing these sentiments, Himanshu Arora, CEO and Co-founder of GoMechanic, expressed optimism about Budget 2024’s focus on enhancing infrastructure. “Our team has been steadily preparing for the rise of EVs, equipping our mechanics with the necessary skills in a measured and thoughtful manner,” he said. He also stressed the importance of improved EV charging networks and maintenance facilities.
Muskan Kakkar, COO and Co-founder of GoMechanic, also expressed excitement about the anticipated emphasis on infrastructure and skilling initiatives in the budget. “Our recent venture into the EV market is timely, as these initiatives promise to bolster the ecosystem around electric vehicles,” she said.
Meanwhile, Varun Goenka, Co-Founder and CEO of Chargeup, pointed out the need to look beyond subsidies for the purchase of electric 2 and 3-wheelers and address other financial concerns that could make a bigger and more positive impact on the market compared to the subsidies. “FAME-I and FAME-II did a lot of good to these segments, as the demand was catalyzed and several new EV OEMs came into the market. However, today, there is not much of a difference between the cost of electric and conventional 2 and 3-wheelers. With greater demand, the gap will further close in 2024 and beyond,” he said.
Adding to the previous insights, Rajat Jaiswal, Co-founder & CEO of KeyDroid, expressed his anticipation for the Union Budget 2024. He emphasized the need for comprehensive support across the automotive ecosystem, benefitting consumers, OEMs, and suppliers alike. He also advocated for budgetary measures that include skilling programs and prolonged clean mobility initiatives and schemes.
Rohan Shravan, Founder and CEO of Tresa Motors, commended the government’s commitment to sustainable mobility and emission reduction. He highlighted the importance of the FAME scheme, which provides crucial subsidies for electric vehicles. With FAME II subsidies likely to be exhausted this year, he sees the proposed INR 40,000 - 50,000 crore for FAME III to cover more EVs as a positive step. He also requested the incorporation of incentives for the EV Heavy Commercial Vehicle and EV component manufacturers.
Greg Moran, CEO and Co-Founder of Zoomcar, reflected on how last year’s budget paved a path to higher adoption of EVs in India. He anticipates the Union Budget 2024 to pave the way for innovative policies that accelerate sustainable mobility solutions and drive economic resilience.
Devndra Chawla, CEO & MD, GreenCell Mobility said, "One significant recommendation is to secure permanent viability gap funding for financially pressured State Transport Units (STUs) and to develop credit guarantee systems to reduce lending risks. We emphasise the importance of an infrastructure sector tag for financing to electric mobility projects and propose a capital expenditure subsidy for private bus operators that deploy e-buses on intercity routes. Categorising e-mobility loans as Priority Sector Lending and introducing incentives for battery recycling are critical steps toward lowering interest rates and promoting sustainability."
Also read: Budget 2024: From AI to semiconductors, here's what tech sector expects from the govt
Also read: Budget 2024: What retail, FMCG sectors expect from the Interim Budget